The new skillset that barely exists but banks are desperate to hire
Every era has some procedural buzzwords. From the "electronification" of trading to "regulatory change" and "business rationalisation", operational trends define the environment for all who work in the front office of investment banks. Rarely, however, has a procedural fad been either as popular or as all-encompassing as the latest one, "digital transformation."
Fund management company Schroders aptly reflects the scope of the mania. Schroders says it's in the process of an "end-to-end digital transformation", a "hugely ambitious process" and something that will end up "fundamentally changing" the way it does business and interacts with clients. It's not the only one. "Everything about our business model is changing," said Deutsche Bank's (still current) CEO John Cryan in 2016 of the bank's digital aspirations, "....we're too old fashioned."
Digital transformation is no less than a revolution, and people purporting to be digital transformation specialists are about as desirable as you can be.
"Right now, banks are all about hiring digital transformation specialists," says Paul Bennie, managing director of recruitment firm Bennie MacLean. "It's really taken off and there's a very limited talent pool of people with the necessary combination of business expertise and technical knowledge."
Adrian Crockett, a New York City-based former MD in Credit Suisse's strategic finance group, is in the process of launching Fingital, a banking focus digital transformation consultancy. He says people with the requisite skills are like gold dust. "It's almost impossible to find people with digital transformation experience in investment banking," he says. "There are just not many people who have done this - you're looking for unicorns that don't exist."
The enormity of the task is part of the problem. Whereas regulatory change people need "only" know about the impact of regulation on business flows, digital transformation specialists need a broad perspective on the business, the technology, and the use of data.
"Banks need to hire digital transformation people with very strong industry experience and understanding of their products, plus strong tech experience, plus strong change management experience," says Crockett. He adds that there are two sticking points: culture and data. "Bankers can be pretty bloody rude to people who don't understand the business, and most banks are very behind on data collection. - When you talk to a banker about data, they think of GDP figures or company reports, whereas what's needed for machine learning and digitalisation are figures on the number of pitchbooks produced every year and the quantity of charts they contain."
Savvy people from the front office are putting themselves forward. George Lee, a Goldman Sachs partner, career investment banker, and chairman of TMT banking is overseeing Goldman's IBD digital transformation in his comparatively new role as co-head of engineering for the investment bank. One former voice trader who moved into e-trading over 10 years ago, says he saw the writing on the wall and reinvented himself as someone with expertise in automation and driving costs down: "You look at taking away 50-60-70% of the manual processes - pricing trades, searching for axes, trade ideas, position reports, risk analysis. These sales tools can be digitized to create a massive cost reduction."
Some banks are plucking senior digital transformation specialists from their internal ranks. HSBC, for example, promoted Peter Taylor, its former head of global standards execution, to head of digital transformation this time last year, and Natixis made its UK COO into a digital transformation lead last September. Others are hiring from outside the industry: when Deutsche Bank wanted a chief digital officer based in London last year, it chose Thomas Nielsen, the former chief digital officer for Tesco's supermarkets. Nielsen's LinkedIn profile says he's now, "Helping turn Deutsche Bank into a global digital powerhouse."
Crockett says some front office bankers and traders are fearful of moving into digital transformation jobs because they think they won't get paid as much there. This may be the case. But as banks rush to hire digital transformation specialists, recruiters say pay is rising: managing directors in tech at U.S. banks in London are now on £500k. This may not be much compared to some front office roles, but at least you will be orchestrating the process that automates jobs out of existence rather than experiencing its consequences.
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